Keystone pipeline decision to languish until mid-June-US source

* State Dept needs to take series of steps

* Environmental review due any day

* No time frame for national interest determination

By Timothy Gardner

WASHINGTON, Jan 31 The Obama administration's
decision on the Keystone XL oil pipeline will not be made until
at least June, a U.S. official said, which would delay the
project for months and frustrate backers of Canada's oil sands.

"We're talking the beginning of summer at the earliest,"
said the source, who did not want to be identified due to the
sensitive nature of the TransCanada Corp project, which
has been pending for more than four and a half years. "It's not
weeks until the final decision. It's months."

A series of steps still have to be taken by the State
Department, where the decision will be made because the 830,000
barrels per day crude oil pipeline crosses the national border.
The pipeline will link Alberta's oil sands and North Dakota's
Bakken shale fields to refineries and ports in Texas.

The State Department did not comment for this story, but
last week a spokeswoman said it did not anticipate making the
decision before the end of March. Previously, the department had
hinted the decision could come in the middle of the first
quarter.

The administration may be delaying because the pipeline has
become a symbol for both opponents and supporters of development
of Canada's vast oil sands.

Environmentalists concerned about the carbon footprint of
the oil sands have seen the decision as the most important
President Barack Obama will make on climate change.

Proponents say the $5.3 billion project would pour capital
into the dismal economy, provide thousands of jobs, and hasten
North American energy independence.

"The fact the administration is taking its time suggests ...
that it wants to succeed with an airtight story that pleases the
primary concerns of both sides," said Kevin Book, an analyst at
ClearView Energy Partners in Washington.

The administration could be figuring out how to balance
environmental actions, such as getting tough on coal plant and
vehicle emissions, with the impact of pipeline, if it ultimately
approves Keystone. Book estimated a final decision would not
come till the end of June.

The delay is painful in Canada which is suffering
persistent, discounted prices for its oil because tight pipeline
capacity. The premier of the Western Canadian province of
Alberta warned last week that it faced a $6 billion revenue
shortfall due to current pipeline constraints.

NEXT STEPS AND LEGAL OPTIONS

Pipeline watchers have been waiting since mid-December for
the State Department to take the next step, issuing a
supplemental environmental impact statement, or SEIS, on the
project. The State Department, has only said the assessment is
expected "in the near future."

Once the SEIS is issued, a public comment period of at least
45 days would ensue.

The State Department would then consider the comments before
finalizing the assessment which could also take time if agencies
such as the Environmental Protection Agency or Army Corps of
Engineers express any concerns.

Then the State Department will determine whether the project
is in the national interest, a decision it makes in consultation
with other agencies considering issues such as jobs and economic
impacts. The department has not yet decided when it would carry
out the determination or about how long it would take, an
official there said.

Even if the State Department's environmental review gives
the go ahead, the project could still be delayed by lawsuits.
The department would issue a "record of decision," and once that
happens, legal challenges to the process may begin.

Danielle Droitsch, director of the Canada Project at the
Natural Resources Defense Council, said her group was focused on
trying to push the administration to deny the pipeline. But if
it moves forward with the project, her group and others would
consider all legal options at that point, she said.

Robert Johnston, the director of energy at risk management
firm the Eurasia Group, said he believes Keystone will
ultimately be approved, even as Obama has pledged to move ahead
with climate initiatives.

"We still think it's a 65 percent chance it gets approved,
and a 35 percent scenario that you get, essentially, another
extended climate study," Johnston said. The United States would
be denied a reliable source of oil its currently in a position
to get if it rejected the line, he said.

Any delay past April 1 could set Congress in action. Last
week a majority of the U.S. senators urged Obama to approve the
project. Senator John Hoeven, a Republican from North Dakota,
said he would introduce legislation enabling Congress to approve
the pipeline if the late March date comes and goes. The pipeline
would take also drain oil from his state, which is undergoing a
drilling boom.
(Reporting by Timothy Gardner and Jeffrey Jones in Calgary;
Editing by Marguerita Choy)

WASHINGTON, Dec 9 U.S. President-elect Donald
Trump is expected to pick U.S. Representative Cathy McMorris
Rodgers, a strong advocate of increased oil and gas development
who is skeptical about climate change, to run the Department of
the Interior, a person familiar with the matter told Reuters on
Friday.

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